Indian international travellers preferred saving on airfares so that they can spend more at the destination during a leisure holiday, and 70.1 per cent of those surveyed said they would prefer to travel by a Low Cost Carrier (LCC) on international routes to take advantage of lower fares, a new survey jointly conducted by Centre for Aviation for Asia Pacific (CAPA) and Expedia has revealed.

The survey published at the CAPA Aviation Summit, which concluded last week in Mumbai, mapped for the first time the size and untapped potential of India’s outbound leisure travel market. The survey is based on consumer feedback from 1,000 participants across India, data from third party sources, as well as research and analysis by CAPA team.

The research report, titled The Inflection Point for Indian Outbound Travel, said only 0.3 per cent of India’s population holidayed overseas, but the market was at a point where it had the potential to grow rapidly as Indian aviation industry changes shape in the next few years.

The survey said Low Cost Carriers had a significant impact on affordability of travel. “LCCs did not exist in India until 2013, but they have had a dramatic impact on air travel by making it more affordable and now command 67. 2 per cent of Indian domestic market,” the report said. In 2012, LCCs had a share of 50.6 per cent seats in domestic market, while full service airlines accounted for 49.4 per cent share.

In 2017, LCCs command a 67.2 per cent share of seats in the domestic market, while full service airlines account for 32.8 per cent seats. Similarly, in international market, LCCs had a 14.5 per cent share of seats while full service airlines had 85.5 per cent share of seats in 2012. In 2017, LCCs had a 22.9 per cent share of seats, while full service carriers accounts for 77.1 per cent share of seats.

The survey said the emergence of Long Haul Low Cost Carriers (LCC) based in India was imminent and could transform the affordability of international travel to more distant points by enhancing the value that holidaymakers generate from their travel budget.

India is presently the fastest-growing aviation market in the world with annual year on year growth of passengers at 17.31 per cent with number of passengers crossing 100 million in 2017. With the Regional Connectivity Scheme making air travel more accessible to Tier II and Tier III, and airlines like low cost carriers Indigo and SpiceJet expanding their aircraft fleet, robust growth of the market is projected.

“Indian travellers are sensitive to price, but they are more sensitive to value. There is a willingness and an ability to spend if they feel they are securing value through additional inclusions,” the report said, adding that LCCs could with narrow body aircraft like A320 Neos or 737 Max launch non-stop routes from India to destinations like Phuket, Sem Reap, Manila, Hong Kong, Hanoi and Seychelles.

The report also said that more Indians were now in a financial position to undertake overseas travel. “We estimate that 80 million-plus people live in households that can afford international travel. This segment has been growing at 18 per cent per annum,” the report said.

The leisure traffic from 2012-2016 from Delhi followed by Mumbai and Chennai has been growing at 6 to 8 per cent compound annual growth rate (CAGR), but traffic from cities like Pune (58 per cent), Madurai (73 per cent) Mangalore (36 per cent), Vishakhapattnam (34 per cent), and Nagpur (35 per cent CAGR) has been growing robustly during this period.

The survey said that leisure traffic from Tier II cities to exotic leisure destinations in South East Asia like Bali, Phuket, Langkawi, Penang, Kuala Lumpur, Bangkok, Kuching has been much higher in last four years. While 47 per cent traffic from Tier I cities came to Bali, 59 per cent traffic from Tier II cities went there. If 17 per cent travellers from cities travelled to Phuket in last four years, 55 per cent from Tier II cities went there during 2012-2016.

The survey said people from cities like Surat, Chandigarh, Guwahati, Indore, Bhopal, Bhubaneswar and Nagpur were increasingly enthusiastic about overseas holidays, with the Internet and social media being key drivers of this interest.

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